AMERICAN ENTERPRISE INSTITUTE

ONLINE EVENT: A CONVERSATION WITH INTERNATIONAL MONETARY FUND MANAGING DIRECTOR CHRISTINE LAGARDE

INTRODUCTION: ARTHUR C. BROOKS, AEI

REMARKS: CHRISTINE LAGARDE, INTERNATIONAL MONETARY FUND

CONVERSATION PARTICIPANTS: DESMOND LACHMAN, AEI; CHRISTINE LAGARDE, INTERNATIONAL MONETARY FUND

11:00 AM–12:00 PM MONDAY, APRIL 3, 2017

EVENT PAGE: http://www.aei.org/events/online-event-a-conversation-with- international-monetary-fund-managing-director-christine-lagarde/

TRANSCRIPT PROVIDED BY DC TRANSCRIPTION – WWW.DCTMR.COM ARTHUR BROOKS: Good morning, ladies and gentlemen. And welcome to the American Enterprise Institute. I’m Arthur Brooks, president of AEI, and I’m delighted and honored to welcome all of you to the special event featuring Christine Lagarde, the managing director of the International Monetary Fund. We’re going to start with remarks from Madame Lagarde, followed by a conversation with my colleague, Desmond Lachman.

Madame Lagarde has had an extraordinary career. Many of you are aware of the fact that she was the first woman to head the prestigious law firm Baker and McKenzie, the first woman to be the finance minister of , and one of the most wonderful distinctions I’ve ever heard — in 2009, was named by the to be none other than the best finance minister in the world. Sometimes we agree with the mainstream media.

In 2011, Ms. Lagarde took over the helm of the IMF in a very difficult period. And her performance during this difficult time earned very wide acclaim. She recently earned a second five-year term, which she’s also accepted.

The principles that she likes to talk about are also the principles that we agree with very strongly here at the American Enterprise Institute. She champions market-based reforms across the IMF membership. She’s an advocate for discipline in fiscal policy. She promotes an open, free-flowing market for trade and capital understanding that, indeed, world welfare is maximized when globalization and free trade work for everybody, everybody in the world. These are things that we stand for at AEI. And we’re proud to feature Madame Lagarde as she talks about these things here with us this morning.

Ladies and gentlemen, please join me in welcoming Christine Lagarde. (Applause.)

CHRISTINE LAGARDE: Well, thank you so much, Arthur, for this introduction. And good morning to all of you, and thank you for being here. Friendly faces, former colleagues, and all others. And thank you to the American Enterprise Institute for giving me the opportunity to talk about the importance of productivity.

I think the new AEI building is actually a very fitting venue to have that discussion. Now, why do I say that? I say that for two reasons. One is because of the intellectual leadership of Arthur Brooks and his team on so many economic issues, and that would be enough of a reason. But I have another reason, which is my second reason. And that has to do with your new address —1789 Massachusetts Avenue.

1789 will resonate for you, will resonate for me, and for , whom I salute here. 1789, the US Constitution came into force, reminding everyone to this day that government exists to serve its citizens. And I do believe that this includes fostering growth that reliably raises the income for all citizens. And productivity is an essential part of that story because it is the most important source of higher income and rising living standards over the long term. It allows us to substantially grow the economic pie, creating larger pieces for everyone.

Let me give you an example of that. Today, it would take an American worker 17 — one, seven — 17 weeks to live at the annual real income level of an American a century ago, precisely in 1915. And we have seen similar progress in many countries around the world. In fact, billions of people enjoy longer, healthier, and more prosperous lives, largely because of our ability to harness the power of productivity.

But this engine of prosperity, which has been so helpful, has slowed down in recent years, with negative consequences for growth and for income that look really hard to unwind. But what are we talking about? Total factors of productivity, productivity — measuring productivity. I’m going to borrow a definition given by Winston Churchill in other circumstances. Total factors of productivity — measuring productivity is actually a riddle wrapped in a mystery inside an enigma. And to try to address that enigma, I would like to answer three questions. How serious is the productivity slowdown? What forces actually hold back innovations and technology diffusion? And, third, if all that is true, what policies can we put in place in order to resist those changes?

So let me start with the good news. Technological innovation seems to be moving faster than ever, from the driverless cars and trucks to 3D-printed human organs, or the gate of the Palmyra temple, to robo-lawyers — and as a reformed lawyer myself, I have seen it.

The not-so-good news is that we can see technological breakthroughs in about every areas and dimensions except in productivity statistics. Back to the enigma.

And over the past decade, there have been sharp slowdowns in measured output per worker and total factor productivity, which can be seen as a measure of innovation, a bit of a residual though. In advanced economies, for example, productivity growth has dropped to 0.3 percent, as opposed to 1 percent, which was the average prior to the crisis. This trend has not only affected advanced economies; it has also affected emerging market economies and developing countries, including China.

Even before the global financial crisis, productivity growth was slowing in many advanced economies, and that was certainly the case in the United States. And then there was a further and abrupt slowdown after the crisis, which was particularly manifest in continental Europe. So our estimation in the IMF is total factor productivity growth — if total factor of productivity growth had followed its pre-crisis trend, that 1 percent that I referred to earlier on, overall GDP in advanced economies would be about 5 percent higher today. It’s as if you were just adding a country like Japan to the existing situation.

Another decade of the similar trend that we’re observing at the moment, that sort of low productivity would seriously, in our view, undermine the rise in global living standards. And we believe that that slower growth could also jeopardize the financial and social stability of some countries by making it just more difficult to reduce excessive inequality and sustain private debt and public obligations.

So, for those who had hoped that just leaning back and waiting for artificial intelligence or a combination of AI, 3Ds, and a few others would address the issue in order to trigger the productivity that we are all looking forward to is simply in our view not an option, and more can be done.

And we believe that policymakers must actually take action to address the forces that are holding back innovation and that technology diffusion. But we need to understand what those forces are. I have, and I will show it to you when we have a conversation with Desmond, which I’m looking forward to so much, I have a wonderful study that was done by the IMF, which actually goes through the many factors that are holding productivity. But I’m going to focus here on three major headwinds.

The first one is something that we cannot do much about, although — it’s population aging. No, I have not discovered any special device, I promise you. But it affects most advanced economies. It affects also quite a few emerging market economies, and research suggests that worker skills tend to increase until a certain point in life and then decline. Many of us around the room would challenge that. And that is because we continue throughout our life to read, to educate ourselves, to be educated by others. And as a result, this decline that is very much a common trend across the board does not necessarily apply to those who have the benefit of that sort of lifelong education cycle, which I will address in a minute. But the research, nonetheless, this room excluded, suggests that worker skills tend to increase, as I said, and then decline with obviously many consequences as a result — on savings, on investment, but also effects on innovation and productivity. Now, is that a done debate? No. And there is still a lot of discussion about this issue. But that’s headwind number one.

Headwind number two is the slowdown that we have observed in global trade. Trade has many virtues. We don’t need to open the newspaper about it. You can go back to Seneca in his letters to Telemach (ph), or you can go back to Montesquieu — (French phrase) — which translates as “where there is trade, there are good behaviors.” And we know from well- established research that trade encourages firms to invest in new technologies and more efficient business practices. It also encourages the sharing of new technologies across borders. But the lack of global demand and the gradual increase in trade restrictions have led to a slowdown in trade growth in recent years. You know the numbers. Growth used to be X, trade used to be X times two. It’s now back to X and sometimes minus X. Now, this has in turn hurt productivity and living standards of all citizens.

Third productivity headwind is the unresolved legacy of the global financial crisis in some major economies. The paper that I will show you, because I’m also here to launch that paper as we are doing here at the American Enterprise Institute, that new Staff Discussion Note underscores the legacy issues and indicates that it is a crucial factor. Unlike normal economic slowdowns, deep recessions we know leave permanent scars and particularly on total factor productivity. We saw this in the past, and we have seen it again in many countries after the 2008 financial crisis, and particularly so in Southern Europe.

Now, there is plenty of discussion as to exactly what the legacies of the crisis are and how it has impacted corporates, how it has impacted people, and what the macro consequences of those are, but let me identify one major factor. And it was the impact of the credit crunch on firms that had entered the crisis with high levels of debt. These companies, as a result of that situation, were often forced into fire sales of assets and deep cuts in physical and intangible investments, including investment in research and development, and those have clearly lasting effects on productivity.

I’ll share with you an anecdote. You were so kind, Arthur, to remind me of the year 2009 when we were, all of us, struggling with the consequences of the financial crisis and the meltdown of the financial sector in late 2008. And throughout the year, we were comparing notes — we finance ministers around the world, and we finance ministers within the . And invariably, we were just astonished by the way in which the German economy was resisting in the face of this adversity and always wondering and asking actually the then finance minister of the time, Steinmeier, how it was that Germany was resisting and how it was that the unemployment rate in Germany, for instance, was not going down as it was abruptly in many of the other countries at the time.

And his response was precisely one of the remedies that can apply: training. And training supported by these sort of concerted practices that the business community had with the trade unions, whereby they were agreeing in those days on reducing the work hours because of lack of demand, of reducing the wages, as part of the consideration for, on the other hand, keeping the employees in the workforce in those companies that could actually afford it.

Did that turn them into zombie entities, as we have seen them in other countries? Precisely not, because those employees agreed to take less compensation in consideration for the training that they were given at the time. So it took that contractual approach between the employees, the business, and the state, which each provided their respective component in order to actually address the risk of — (inaudible).

So I’ve identified those three big headwinds for you. And that raises the final question of what can we do in the face of those headwinds. What kind of policy actions can actually resolve those issues so that the next generation is better off and we’re not cruising at this 0.3 percent productivity rate on an ongoing basis? One thing is clear. We need more innovation, not less, but we also believe from experience and from looking at all countries that market forces alone will not be sufficient to deliver that boost to productivity because innovation and inventions are to some degree public goods. And to a certain degree, they are fueled by public investment.

If you look, for instance, at how much spillover there has been from investment in the defense industry, which predominantly is public spending, massive. If you look at — I’m sure you all have one. I heard a couple of them ringing earlier on, you have those little devices. Well, they’ve usually benefited from state funding, from internet to wireless networks to GPS to touchscreens, each and every step of the way you find public spending.

Now, this is one sort of positive way of fueling, and there are not many private- sector enterprises that will actually invest in the long term in fundamental research, which itself generally fuels applied research. So that’s on the active front, public spending, well designed, well focused will actually fuel and participate in this innovation process that generally belongs to the private sector.

But there is another avenue where public action and policies will have an impact because there are policy barriers that can impede innovation. And we at the IMF believe that all governments should do more to unleash this entrepreneurial energy and spirit. All those governments can achieve this by removing unnecessary barriers to competition, cutting red tapes, investing more in education, and providing those tax incentives for research and development. Often questioned, but we’ve done some really thorough study on a cross- border basis to actually demonstrate that these tax incentives to research and development are efficient.

Our analysis shows that, if advanced economies were able to ramp up private-sector research and development by 40 percent on average, they could increase their GDP by 5 percent in the long term.

To encourage investment and risk-taking, governments need to give clear signals about future economic policies. High-quality public investments in education and training, research and development, and infrastructure — including in this country — could help provide those signals, could help catalyze private investment while boosting productivity and economic potential. Similarly, signals about tax policy will also enhance predictability for investors. And there is nothing like more certainty, better predictability that investors like going forward.

We also believe that reinforcing trade as an engine of broadly shared growth will reduce uncertainty and will also boost productivity. In Europe, governments can move the productivity needle by facilitating corporate debt restructuring, strengthening bank balance sheets, and creating those financial markets where those instruments can be actually adequately, sensibly repackaged — not in the pre-2007 way, but learning from those lessons. And that would certainty encourage fresh corporate investment in the hands of young and vibrant entrepreneurs rather than in some of those zombie firms that I have referred to earlier on and that are kept alive without real purpose other than maybe not to recognize a loss in a balance sheet.

I told you that there was not much that we could do about aging, and I still believe that. But education, constant brain agility is something that we demonstrate can be stimulated over the course of life. But that requires clearly investment in education. On a macro basis, the are clearly countries that can certainly take the benefit of integrating and optimizing the flow of refugees that is coming their way, or opening doors to some migration or at least allowing the women to have their space in those economies. I’m here clearly thinking about Japan.

Now, clearly, I could go on and on because that paper that we’re releasing today, which I hope we’re giving to everybody in this room — yes, you have it, so I don’t need to do any advertising actually. But there is much more in that paper than there is in my short remarks. But just one final point.

We know that technology gains, trade, and structural reforms have come with job losses in shrinking sectors. This is often the result of technology breakthrough, of innovations. And those structural changes have always accompanied economic growth. What we are now seeing, because maybe we have not paid enough attention, is entrenched economic and social problems in some disadvantaged regions when economic inequality has already been rising in many countries. And this is obvious among lower-skilled workers that suffer disproportionally from job losses, from family breakdowns, from physical and mental health issues. Those who suffer from what you have coined, Arthur, if I’m right, this dignity deficit.

In our view, a critical step is to support lower-skilled workers through targeted education programs, skills training, and employment incentives, the three categories together. Another priority is to retool income policies and tax systems, including in this country, where, by the way, we have advocated extending the earned income tax credit. But certainly, if I was to leave you with one single message, we need more and better education. This is very clearly demonstrated, very interesting way in this paper that you have, how we have — the advanced economies in particular have had the benefit of a ramp- up in schooling, in education, in training, and how that benefit has gradually, gradually stopped being as much of an amplifier. We need to work on that.

We estimate that in both advanced and emerging economies, the slowdown of educational attainment has lowered labor productivity growth by 0.3 percentage points annually since 1990. So, indeed, education and training are the key policy actions to raise both productivity growth and attempt to reduce inequality. More inclusive and sustainable growth is what we, the people, presumably expect from their policymakers, from our policymakers.

Back to 1789, where we are, it not only saw this coming into force of the US Constitution, it was also a pretty symbolic year for my country, France. This is when we started with Bastille Day and which has subsequently become the national holiday for France. Well, it certainly was a revolution. It was not a technology revolution. And it certainly created a different order moving forward. We do hope that the technological revolution that we are seeing at the moment will actually bring about a lot of the goods that it took a few years of that revolution back in 1789 and a lot of violence along the way, and that it will do so in a much more civilized, sensible, and respectable way.

With that, I thank you very much. (Applause.)

DESMOND LACHMAN: Thank you very much for those remarks.

Mrs. Lagarde has been so gracious as to allow us to ask her a few questions. I’ll take the initiative to ask her a few questions, and then we’ll take a couple of questions from the audience.

But before that, I really should thank Ms. Lagarde not simply for coming to the AEI, but for leading the IMF in a research effort in something that clearly is very important. And it strikes me that this is research the best way it should be done. Not only are you identifying what are the causes of the underlying slowdown in productivity but you’re also coming up with concrete and constructive remedies as we might deal with this. But maybe if I just start with one question.

MS. LAGARDE: May I — before you go to that, I want to thank you for your compliment, but first of all, it’s not about me, and it’s not me but those who have conducted the research are sitting right here. So Maurice Obstfeld, who is the director of our research department and my chief economic counsel, and Romain Duval, who is also a compatriot of mine. So for him, 1789 certainly resonated quite a lot.

You know, the beauty of the research that they’ve conducted is not so much that we have proposed ideas and policies because they’re not that different from many of the things that you throw out and you sort of casually go through education, training and, da, da, da, da. What I think is really pertinent about the work that they did is how it impacts — for instance, education, how it impacts throughout people’s life, how it can be tailored to leverage the human potential throughout those aging societies, how combined with active labor policy it can actually have an impact. And they go through the details of some of those labor policies as well. So I think it’s a really interesting — you know, there’s nothing sort of spectacularly revolutionary because, unfortunately, there is no such thing. But the way in which they’ve gone into sort of granular analysis of where we’re failing, where there’s a default, where a mechanism has actually sort of stopped the process — that’s really interesting.

MR. LACHMAN: Having read the report, I could compliment you for being systematic as well, you know, that it’s a very orderly kind of report. But maybe if I could ask a question related to the legacy of the global financial crisis. You know, that seems to be a major explanatory fact of why we have slowed so abruptly since 2008. So I guess it raises the question of is that crisis now — eight years after it started, is that really behind us, or are there places like Europe in general and I think of places like Italy in particular where there’s still a lot of work to be done to sort it out?

And there’s also a question I would expect in a place like China, where we’re seeing rapid credit expansion on a scale that we haven’t seen before, might be setting themselves up for the kind of difficulties that we’re really just digging ourselves out of in 2008 that might have an impact, you know, on productivity going forward.

MS. LAGARDE: You know, we are almost 10 years after the crisis. 2007, you know, as we were discussing, the summer of 2007 is when BNP actually closed down those funds, which triggered a whole process of the crisis and the sort of apoplectic — (inaudible) — in September 2008. And almost 10 years down the road, there are still legacies, particularly in continental Europe and certainly more so in Southern Europe, which have not been addressed in a systematic, heavy way.

I think it’s fair to say that comparing the two approaches, the one by the US and the one by the Europeans, the US under the leadership of Hank Paulson first and Tim Geithner second, was to sort of go big. You have the saying, go big or go home, or something like that. Well, they certainly went big in terms of TARP. And I think the beauty of it all was that it really addressed deep and hard and quickly the issue of balance sheet weakness, lack of capital, and so on and so forth.

The same approach was not adopted in Europe. And it was much more gradual, much more incremental, sometimes with an element of denial actually, because I remember when I first started — and I’m as guilty as — when I say we, I was part of that group, too. But in 2011, at the Jackson Hall Summit, when we indicated the volume of nonperforming loans and the need for capital of the European banks, there was immediate, you know, backlash and, you know, what is she talking about? What does she know about it, da, da, da.

And I think there is still a bit of that legacy alive in that part of the world. When you look at the nonperforming loans proportion that is still sitting in the balance sheet of some banks — granted, with a relatively high percentage of provisions taken, better than what it was, but still sitting in those balance sheets with no recognition of what probably should be recognized a bit earlier, that’s a brake on potential credit, on potential investment, and ultimately potential productivity improvement.

So that’s one. I think the other, you know, consequence is that we’re still living with which is the sort of lack of demand that has been the cause or identified as the cause of many of our difficulties today, which is still there and which certainly applies to investment. Again, we’re back to the circle of, you know, less investment, less productivity going forward.

And that takes me to your Chinese question. You know, significant investment, if it is the productive investment that is going to unleash the productivity, this enigma that we were talking about, that’s fine. If it’s to invest in yet another program of unnecessary residential buildings or unnecessary infrastructure projects in some of the provinces that don’t actually need it, that’s another issue. And we — and I think the Chinese authorities actually know that the excess of credit needs to be reined in and needs to be under more control.

MR. LACHMAN: Maybe we could move on. That just seems that as the legacy from the financial crisis has been dealt with, we’ve now got another threat to productivity growth in terms of rise in a trend towards protectionism, thinking that we’ve just seen the communiqué strangely doesn’t mention anything about a fight against protection. Should it be a priority, you know, countries moving into a pretty nationalistic side on the protection? Do you share my fear that this is really a great threat to productivity growth going forward, you know, just the way in which world is integrated, and now we’re having countries wanting to move in reverse?

MS. LAGARDE: First of all, as a caveat to my response, I think much has been made out of this disappeared sentence. I think what is important is: What does it mean? If it means that this is all lip service to a principle that everybody adheres to, but doesn’t respect, therefore, before we reinsert that statement, let’s make sure that we actually abide by the we shall resist all protectionist measures, that’s one thing.

But if the intent behind the words is to say, we want to be protectionist, that’s a major issue. And that’s a major issue because trade, the movement of goods and services, the movement of technology, the flow of capitals unimpeded, unrestricted, has actually served the global economy and has served all economies, not just some to the detriment of others. You know, if you look at the way in which efficiency has improved, the way in which technology has also improved, this is as a result of openness. This is as a result of trade.

You know, I was quoting Seneca and Montesquieu not randomly because it has always been a factor of good behaviors, good habits, and progress in general. So open trade, fair trade — and there is much discussion about the concept of fair trade, but you know, as a reformed lawyer, I understand fairness, and there are many interpretations of it all. But if it is to refer to level playing field, to inclusiveness, certainly fairness is the right and adequate attribute of trade that facilitates the good allocation of the factors of production, both capital and labor.

MR. LACHMAN: The last question I’ll ask you before turning it over to questions from the audience is one of the unintended consequences of very high productivity growth has been wages stagnating, income distribution getting worse, all of this giving rise to populism. My question would be: What is it that the IMF might be doing to put us in a better direction, you know, to have more — I think you called it more inclusive kind of growth so that the benefits are more widely shared than they’ve been to date?

MS. LAGARDE: You know, our field is to advise, conduct surveillance missions, provide lending eventually and certainly technical assistance, but always with the sort of macroeconomic approach to it. So we are trying under our mission and as part of our service to the 189 countries that constitute the IMF, we’re trying to incorporate those findings that I have just commented upon concerning productivity, concerning the output, concerning the unintended consequences and sometimes negative consequences out of innovation, technology breakthrough, and eventually trade as well. We’re trying to incorporate that into our macroeconomic advice.

And, you know, it’s a fascinating work because a lot of the issues are going to have to be addressed at the micro-level as well, in the private sector, in the enterprises, at the regional level because what you see is those entrenched unintended consequences in those shrinking industries are very often concentrated in particular areas. You know, when I was finance minister for France, we were clearly dealing with some restructuring that was taking place and affecting the Northern part of France or the Northeast part of France, where, clearly, the steel industry had left its mark by essentially disappearing and being massively restructured. The same was true with a few other sort of hard industries.

And we could have taken and we did take some measures, particularly at the financing part of it at the national level, but a lot of it had to be conducted at the regional level, in order to offer displaced people — displaced out of their skills — the retooling, the retraining in order to — and courage, the setting up of new businesses in those areas. So it’s a combination of the macroeconomic policies which combine, you know, both fiscal, monetary, structural reforms with a focus probably on structural reforms for that particular purpose. But also the regional measures and the implementation, which at the end of the day is what really matters.

MR. LACHMAN: Thank you. We’ve just got about 15 minutes left. So what I’ll propose is if I could take like three questions, and then we’ll put them to Ms. Lagarde.

Q: Ted Truman from the Peterson Institute. Thank you very much, Madame Lagarde. I’d like to take — turn — Desmond’s last question, the other way around. So what are the implications for the IMF of the rise in populism, which includes a view that international institutions don’t serve national interests at least in countries like this one? Do you have some thoughts about how the IMF can try to handle this backlash, if I may put it that way?

MR. LACHMAN: Thank you. This gentleman.

Q: I’m Michael Nadieu (ph) from — (inaudible). Mrs. Lagarde, I’m trying to find out when the review is going to finish and if the IMF is going to participate in the Greek program. And also — easy questions. And also —

MR. LACHMAN: I’m not sure that that has much to do with productivity growth.

Q: Yeah. I understand, but, you know, it’s an opportunity. (Laughter.) And also, the IMF is saying that Greece cannot handle more , but at the same time the IMF are asking for even more extremely difficult measures. And I think it’s a little contradictory. If you can tell us your opinion.

MR. LACHMAN: Any other questions? Just we’ll take one last one at the back.

Q: Thank you. Bill Clifford from the World Affairs Councils of America. Is there any room in the policy remedies for a guaranteed basic income to alleviate low-skilled, low-wage jobs disappearing?

MS. LAGARDE: Shall I take another one?

MR. LACHMAN: Yeah. One more.

MS. LAGARDE: OK. You know what? I’ll answer the first three and maybe it will come back to you. You know, I’m very much tempted to take your Greek question offline because I think — I understand your interest. I know you. I’ll give you a quick answer.

Certainly Greece can improve its productivity. I’m trying to relate it to the topic we have. (Laughter.) And I’m not aligning myself with Minister Scheuble, who says that as well, who says it’s not that Greece needs less debt. It’s that Greece needs more productivity. We at the IMF believe that Greece needs to have less debt, and we are supporting, as you know, a degree of debt restructuring going forward so that the debt is sustainable and allows Greece to be more productive, which is why we have strongly recommended structural reforms and reforms that will actually have an impact, not the low-hanging fruit that will not last in the long run but the sustainable reforms, including, for instance, on pension and on tax so that it can sustain the recovery and unleash the productivity that is there to be unleashed. And, as you know, the IMF would participate in a program if the program can walk on two legs, the reforms that provide the fiscal basis on which we can be involved and, second, debt sustainability analysis that actually fits the potential recovery of the country, and it’s under those two conditions that we could.

So that helps me to turn to Ted’s question on what does — essentially, what you’re asking me is to justify our existence. (Laughter.) What do we do to serve the national interest? You know, when in doubt — and probably as a lawyer by background, training and inclination, I tend to go back to the articles, as some people would go back to the Constitution. So I’d go back to the articles that were drafted 70 years ago when, on the ashes of the Second World War, all participants, 44 nations at the time, thought that it was better to actually trade and to do so in a financially stable world than to war with each other. You know that better than anybody else.

And the Article One of the IMF actually gives us a mission which is strictly focused with many ways to get there and many attributes, including trade, including growth, including employment and all of that, but the mission is stability, financial stability, prosperity. Those are the key words in the Article One of the IMF. And I think our mission survives and is sustainable today and is actually more needed than ever because nobody wants instability, including financial instability. Nobody wants no prosperity. And what we need to do — and I’m accountable, the IMF is accountable to the membership, which is 189 countries, to help deliver that. Not that we are, you know, the ultimate economic agents that will actually provide financial stability. There are so many different players, and the landscape is getting more complicated by the day.

But our job is to try to elicit understanding, policy advice, technical assistance, eventually lending if countries are in dire trouble, to restore financial stability so that trade can be had between countries, so that investments can flow between countries and within countries. You know, I don’t think it’s in anybody’s interest, including for the United States, for that matter, that there is financial instability in the Middle East, in addition to what is already there — that there is complete disarray in some countries around the world, including in the vicinity. So we’ve tried to provide that. And I think that that service is going to be needed on an ongoing basis.

So we’ll continue to be accountable, and we’ll continue to try to improve both at the research level, at the policy advice level, at the implementation level and being both on the ground and available as also sharing the knowledge and the — you know, all our statistics, all our numbers are available for anybody to do more work and more research. We’ll continue doing that.

Now, the third question was — it’s a difficult one that you’ve asked on the guaranteed basic income, and it’s one where we have not yet refined our policy line. We know about what’s out there in terms of both research, analytical work, but also exploratory work on the ground, whether it’s in Finland, in some sort of smaller communities in India. There have been places in the United States where that was also explored and experimented.

We have views on the earned income tax credit. We have views on the minimum salaries, but I don’t think that we have yet adopted a view on guaranteed basic income. It’s a debate that rages in my home country at the moment as part of the presidential elections that are going on. But I think I would defer to Maurice and his very competent team of researchers to actually arrive at the pros and cons. And I’m sure that they will be one hand, the other hand, and hopefully we’ll be able to close by way of recommendations. Unless I see a very strong signal from Maurice that I have missed something in the last couple of weeks, which I may have. OK. I get the two hands so I think it’s a good sign.

MR. LACHMAN: We’ll just take this as the last question.

Q: Thank you and welcome. You alluded in your talk to a question about computer productivity. Do you yourself believe that we have more real productivity increase from computers than the statistics seem to show?

MS. LAGARDE: That’s a question that is addressed in great detail and with great integrity in the paper, so I hope it will satisfy your completely legitimate curiosity. I think the bottom line conclusion from their research and their findings and their comparisons, and I won’t go into too much technical details about it, is that, yes, there is some of that productivity that is not measured. So the answer is yes, but the answer is “yes, but.”

From previous waves of technology breakthrough and other inventions in the course of recent history, there has probably been just as equal mismeasurements and lack of value of productivity not measured under those instruments. And I think that is the result of really cross-examination between the economic department, the research department, and the statistic departments to really get to the bottom of it. I think it’s also the line that has been sometimes much to their chagrin adopted by most of those who have really dug into it and did, you know, substantive research that, yes, it is misrepresented, but not any more than it was in previous waves of significant changes.

MR. LACHMAN: Thank you very much. We’ll end this program now. It remains for me to do two things. The first is if I could ask you to be seated just until Madame Lagarde has left the room. But the second, more important task is for me to thank you very much for those very thought-provoking remarks, and thank you for your visit.

MS. LAGARDE: Thank you so much for having me. (Applause.)

(END)